Interview with: Markus Petersen, Chief Financial Officer. Greg B: How do you calculate the number of cars that will meet the demand? Markus P: The most important point is experience. We have data about the last 4 years from which we can see how the firm's capacity developed. We have the hours in a day that the cars were booked so we know a lot about the relation of the members to cars. We have a very important season: the better the weather the more people drive. Also, people need STATTAUTO for rides on the weekend and to transport big things that they can't move with bicycles. STATTAUTO's money comes from the spare time events, like barbecuing out of town. We know how holidays effect the firm, a very important thing. We learned the learning curve/function- the longer they are a member, the less they drive. You have a participant who had a private car, where driving more didn't cost much more. So they are not educated by money. So what happens is they get our first invoice, and it's very high. It depends on how much property they had in other cars before joining, whether they owned a private car, shared a car, rented cars , or only used taxis. The higher the investment in car property, the more they drive. In the beginning with STATTAUTO cars there is more of a learning effect. Every drive or every ride is listed, so they begin to think, "this car trip was not necessary, we could have taken the train" and "this other trip was not necessary, we had a bicycle". So they begin to drive less. So this is very good for the environment, and not bad for STATTAUTO. What we do is just run more people per car. So we began with 12 people per car. That was an average number for the first year. Today we have 25 people per car. This is why it is very important to know about the learning function. This function is not homogeneous, it is changes because participants learn a lot about preventing transport, preventing the buying of services that are far away' say 10 km. They don't do that anymore. They get another store. What they don't like to reduce is spare time rides, so there they learn less. This is bad for STATTAUTO because the business structure has to adjust. Our problem is that people drive only on the weekends, because they learn to prevent driving during the week. Therefore, we need other people ... so we give a discount to businesses on weekdays. The Art of growing a carsharing firm is to plan for: 1). the annual season, 2) the holiday season, and 3) the learning curve. And to plan for growth. That is Carsten's problem: as marketing boss, he has to bring in the people. He must say that $50,000 will bring 1000 new members. That is the goal in his department. He has to do that. And I have to make sure that the number of cars grows only with heavy use. My goal is that the cars get used 12 hours per day. Normally, we reach our goals. In 1995, Carsten was suppose to bring in 1100 people. He is almost 3 months ahead. I've had better years. Last year was very good. 1994 was very good. 1993 was not. We broke even. We haven't lost money since 1992. That's ok. We are financially balanced. Page 52 RAIN Summer 1996 Volume XV, Number 1 GB: How do you structure prices? MP: Price policy is planned by the management, in this case, Carsten and myself with the input from employees. Then we have a very complicated and a very good semidemocratic process for implementing new prices. The firm needs to be financially balanced, stable. It doesn't have to make profit but it hC:Is to be stable. You have to differentiate prices, and the other problem is how to finance the firm. Where do you get the money to buy or have 140 cars, or to finance the office? The first problem: price structure. We propose to the STATTAUTO Verein [membership consumer union]. GMBH is the corporation... we are sitting in the GMBH's offices. The Verein doesn't have any money, it has some number of members. Participants can be a member in the union. When participants want to control the corporation, they can join the union, but they don't have to. As long as they think everything is wonderful, the prices are ok and the service is good, they don't.have time to be a member of the union, don't have time to go to the general assembly meeting, and don't want to be a Verein member. So now we have 500 members of the Verein and STATTAUTO has 2800 participants. So we propose new prices to the Verein. The Verein has a board and we have a contract with the Verein. The board controls the STATTAUTO corporation, that means that there are no secrets concerning the performance of the firm. The monthly statements that the computer gives are sent to them. They know as much as I know about financial stuff. They may not pay as much attention to it, but they watch over to make sure there is a balance. That the firm is stable. The Verein makes sure we don't lose the money that they gave us. With these numbers, we can always argue for price increases, like "the insurance has gone up", "we got more cars", "we have a new, more expensive office", "the salaries have gone up", etc.. They see the point. They don't want us bankrupt. So we don't have fights with them. Now we come to the second part: how to finance the firm. In Germany, you can do it with the cooperative, but this is very slow. You have a general assembly which is very powerful, which is the capital. They are the capital and can kick management out. In our model, they can't. A general assembly of 2,800 people would be a very slow body. If you want something new like a new product, or you want to save money, or you want to invest something, or have a new campaign, or you want to plan losses in the firm...You want to say next year we are going to lose money and it doesn't matter because after that things improve because of this and that. To explain that to a riskaverse body is almost impossible. They are cautious, don't want to invest their money in something they don't understand because they don't know what is happening. They only meet with the general assembly one time a year. So, firms with this structure get very slow. We have colleagues that have this problem. They have management that always wants to do things, invent things and grow and get rid of private cars. And they can't do things because they don't have the power to do them.
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